Shanghai China’s largest private conglomerate, Fosun Group, could use a $4 billion purchase of
Healthscope
as a platform to extend the private hospital operator’s model to the rapidly growing Chinese market.

Fosun head of global investments Patrick Zhong said his company, which has $US45 billion ($48 billion) in assets under management, was interested in the Healthscope sales process as it focused on helping foreign companies tap into the rising Chinese consumer market.

“Healthscope is a pretty large company, but think about if they had the same position in China [as in Australia]," he told The Australian Financial Review during an interview at his Shanghai office. “The counterpart of Healthscope would be huge – 10 times larger potentially. This is the ­opportunity."

Though Mr Zhong declined to comment specifically on the bidding process for Healthscope under way, he said: “We are genuinely interested in working with the best companies in Australia which have an interest in China."

AFR
AFR

Healthscope’s private equity owners, TPG and The Carlyle Group, are looking to sell the business they paid $2.6 billion for in 2010. They are considering a public float, trade sale and potentially spinning off its property assets.

Fosun was founded in 1992 by four classmates from Shanghai’s Fudan University. The company was one of the first in China to run a private diagnostics business for hospitals before expanding into medical devices, pharmaceuticals and aged care.

From a small pharmaceuticals company, it has grown into a global conglomerate with investments in Chinese mining and real estate as well as retailers, financial services and property around the world.

A stake in Club Med

Fosun’s first foreign investment was a stake in Club Med, and last year it bought the headquarters of JPMorgan in New York. The company, which started expanding offshore in 2010, has a strategy of investing in foreign firms and then helping them enter the Chinese market.

Fosun is among a host of foreign buyers eyeing Healthscope, the second-largest private hospital operator locally behind
Ramsay Health Care
, with 44 hospitals and 4500 beds across the country. The company also has medical centre and pathology divisions.

Fosun is expected to face stiff competition from the likes of US giant HCA Holdings, the world’s largest hospital operator, and Malaysia’s IHH Healthcare.

“We’re not there to create noise," said Mr Zhong during the interview in his office overlooking Shanghai’s Bund strip along the Huangpu river.

He said Fosun was very interested in making investments in Australia, which has the advantage of being in the same time zone as China.

Mr Zhong will visit Australia next month and outside of the healthcare sector is looking for opportunities in agriculture, mining, consumer brands and tourism.

Fosun is also the publisher of Forbes Magazine in China and owns local financial newspaper the 21st Century Business Herald.

Mr Zhong stresses Fosun is not a private equity company, but a conglomerate modelled on the likes of Warren Buffett’s Berkshire Hathaway Group.

It aims to fund acquisitions by investing the premium income generated by its insurance businesses. Along with life, general and car insurance businesses in China, Fosun also bought 80 per cent of Portugal’s largest insurer, Caixa Seguros, in January, paying €1 billion ($1.48 billion).

Mr Zhong said Fosun likes to take on global partners, and while it can fund big acquisitions and take on majority stakes, as in the case of the Portugal investment, it is also happy to be a minority shareholder.

“We form an alignment of interests with the majority shareholder who is from that country . . . then we go in and we help create upside for that business by connecting them with the consumer in China or driving Chinese to that market to consume their products and services."

“We’ve probably made 20 investments globally, and so far it’s been positive and those companies feel that we are adding to the business."

China’s healthcare spending is expected to grow from $US357 billion in 2011 to $US1 trillion by 2020, according to a 2012 McKinsey report.